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Health Information
Management: Concepts,
Principles, and Practice
Sixth Edition
Chapter 8
Revenue Cycle Operations
© 2020 AHIMA
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Introduction
• “A healthcare organization’s financial circulatory
system” (HIMSS 2018)
• Begins when patient initiates to receive services in
a healthcare system
• Ends when payment for services are rendered and
account is closed
• Success depends on:
• People
• Tools/technology
• Processes
2
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Revenue Management Life Cycle
3
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Revenue Cycle vs. Life of an Individual
Account
• The term revenue cycle suggests the patient
account flow is cyclical
• The life of an individual patient account flows
through specific stages from beginning to end
4
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Healthcare Revenue Cycle for an Individual
Account
5
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FRONT-END PROCESS
6
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Revenue Cycle: Front-End Process
• Includes:
• Patient access components
• Scheduling
• Preregistration
• Insurance verification
• Preauthorization and precertification
• Medical necessity coverage issues
• Registration
• Financial counseling
• Point of service collection
• Preencounter services
7
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Revenue Cycle: Front-End Process
• Patient access components
• Scheduling
• Preregistration
• Registration
8
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Revenue Cycle: Front-End Process
• Scheduling patient services
• Obtain source of payment
• Collect patient demographics
• Validate patient information upon arrival, if
preregistered
• Contribute to an excellent patient experience
9
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Revenue Cycle: Front-End Process
10
Examples of Common Registration Errors
Incorrect insurance plan listed Policy or group number missing or invalid
Patient with insurance listed as private pay Patient not eligible on date of service
Medicare listed when plan is Medicare health
maintenance organization (HMO)
Medicare listed as primary when should be
secondary
Minors listed as guarantors More than one medical record number per
patient
Accident claims without occurrence codes Patient relationship to insurance subscriber
code errors
Failure to list medical necessity Missing guarantor or employer information
Physician orders incomplete or missing Missing prior authorization or required for
service provided
Source: Shorrosh 2011
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Revenue Cycle: Front-End Process
11
Examples of Common Registration Errors
Internal coding mismatches (financial class to
patient type to stay type to service code to
admit cod)
Transposed digits: Social Security number, date
of birth, policy number, group number
Invalid punctuation in specified text fields Misspelled name
Insurance eligibility verification failure Address verification failure (returned mail cost)
Observation patient with inpatient stay type Point-of-service collection failure
Incomplete or inaccurate Medicare secondary
payer questionnaire
Source: Shorrosh 2011
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Revenue Cycle: Front-End Process
• Insurance verification
• Validate patient is member of insurance plan
• Determine if plan is in-network or
out-of-network
• Determine if scheduled services:
• Expenses are covered
• Require referral or prior authorization
• Require out-of-pocket expense
12
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Revenue Cycle: Front-End Process
• Preauthorization
• Requires healthcare provider obtain permission from
the health insurer prior to predefined services being
provided to the patient
• Precertification
• When the insurance carrier must review the proposed
service or procedure and approve it as medically
necessary before payment will be granted to the
provider
13
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Revenue Cycle: Front-End Process
• Preauthorization and Precertification
• Staff need to understand medical procedures and tests,
initial diagnoses, and scheduled treatments to obtain
the necessary preauthorization or precertification by the
insurer
• Wide variation in authorization and certification
requirements among payers
14
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Revenue Cycle: Front-End Process
• Medical necessity coverage issues
• Insurers cover health-related services that they define or
determine to be medically necessary
• American College of Medical Quality (ACMQ)—focus is
providing leadership and education in healthcare quality
management
15
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Revenue Cycle: Front-End Process
• Medical necessity
• Medicare coverage policies—national coverage
determinations (NCDs)
• Local Medicare administrative contractor policies—local
coverage determinations (LCDs)
16
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Revenue Cycle: Front-End Process
• Medical necessity
• Advanced beneficiary notice of noncoverage (ABN)
• Hospital-issued notice of noncoverage (HINN)
17
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Revenue Cycle: Front-End Process
• Registration (a.k.a. “admissions”)
• Verify patient demographics collected during scheduling
• Obtain copies of patient insurance card
• Verify identify using driver’s license or other
government-issued ID
• Obtain patient consent
• Collect copayment or deductible
• Initiate financial counseling, if applicable
18
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Revenue Cycle: Front-End Process
• Financial counseling
• Ensure patient understands the financial aspects of care
and process for resolving any financial responsibility
• Financial counselors responsible for:
• Identifying and verifying method of payment
• Understanding patient’s financial assets
• Discussing payment alternatives with patient
19
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Revenue Cycle: Front-End Process
• Financial counseling
• Strategies for financial counselors include:
• Providing discounts on hospital bills
• Providing incentives for prompt-payment discounts
• Consistently following procedures
20
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Revenue Cycle: Front-End Process
• Point of service collection
• Collection of portion of the bill which is the patient’s
responsibility to pay prior to provision of service being
rendered
• Works well with scheduled and non-emergent patient
visits
• Communication with patient to set expectation of cost
of services, insurance coverage, and expected payment
21
© 2020 AHIMA
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Revenue Cycle: Front-End Process
• Preencounter services
• Centers handle
• Preregistration
• Insurance eligibility
• Benefit verification
• Payer preauthorization or precertification
• POS collections
22
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MIDDLE PROCESS
23
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Revenue Cycle: Middle Process
• Includes:
• Clinical services
• Clinical documentation
• Case and utilization management
• Health information management and clinical coding
• Charge capture
• Charge description master
24
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Revenue Cycle: Middle Process
• Clinical Services
• Services and procedures provided to diagnose or treat
the patient
• Information about encounter documented
• Old adage
• “If it is not documented, it did not happen” and therefore, not
reimbursable
25
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Revenue Cycle: Middle Process
• Clinical Documentation
• Complete, accurate, and timely documentation of
patient history, assessment, surgical and procedure
notes, and clinical plan
• Documentation to support provided service
• Reflects actual condition of patient
26
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Revenue Cycle: Middle Process
• Clinical Documentation
• Operates as a communication tool
• Critical for patient safety and continuity of care
• Supports decisions made in patient care
• Supports reimbursement from payers
• Supports services provided as legal testimony
• Functions as the provider’s business and legal record
27
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Revenue Cycle: Middle Process
• Case and utilization management
• Delivering the appropriate care at the appropriate time
in the appropriate patient setting reflecting the
appropriate cost is key to the concept of successful case
and utilization management
28
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Revenue Cycle: Middle Process
• Case management
• Collaborative process of assessment, planning,
facilitation, care coordination, evaluation, and advocacy
for options and services to meet comprehensive health
needs through communication and available resources
to promote patient safety, quality of care, and cost-
effective outcomes
• Utilization management
• Planned, systematic review of patients receiving
healthcare services against criteria for appropriateness
of services being provided as well as admission,
continued stay, and discharge planning
29
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Revenue Cycle: Middle Process
• Case management role
• Improve outcomes
• Ensuring appropriate and timely care is provided
• Connecting with patients after they leave the facility
• Eliminate avoidable days
• Reducing risks of readmissions
• Enhancing claims management
30
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Revenue Cycle: Middle Process
• Utilization management role
• Review health record to obtain information to make UR
decisions
• Apply criteria objectively for admissions, continued stay,
level of care, and discharge readiness
• Screen and coordinate elective and emergency
admissions and transfers, outpatient observations, and
conversions of status as appropriate and compliant
31
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Revenue Cycle: Middle Process
• Utilization management
• HINN
• Medicare hospital-issued notices of noncoverage
• If services
• Not medically necessary,
• Not delivered in the most appropriate setting, or
• Custodial in nature
• Adverse determination
• Commercial payers
32
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Revenue Cycle: Middle Process
• Health information management and clinical coding
33
Provider
Inpatient Outpatient
Diagnosis Procedure Diagnosis Procedure
Physician/
Professional
ICD-10-CM
HCPCS
(Level I = CPT & Level II)
ICD-10-CM
HCPCS
(Level I = CPT & Level II)
Facility/
Hospital
ICD-10-CM ICD-10-PCS ICD-10-CM
HCPCS
(Level I = CPT & Level II)
© 2020 AHIMA
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Revenue Cycle: Middle Process
• Health information management and clinical coding
• “Soft-coding”
• Human interaction with assessing clinical documentation
• Selecting code assignment
• “Hard-coding”
• Discussed later with chargemaster functions
34
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Revenue Cycle: Middle Process
• Health information management and clinical coding
• Discharged, not final billed (DNFB)
• ICD diagnosis and procedure code assignment
• CPT or HCPCS code assignment
• Case mix index (CMI)
• Service mix index (SMI)
• Physician queries
35
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Revenue Cycle: Middle Process
• Charge capture
• Method of recording services and supplies or items
delivered to patient and billed on a claim form
• Used for:
• Reimbursement
• Tracking and utilization
• Monitoring inventory
36
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Revenue Cycle: Middle Process
• Charge capture
• Importance of quality charge capture:
• Payment related to charges
• Charges submitted assist future rate setting
• Charges reflect resource utilization
• Charges assist with measuring productivity and labor costs
• Errors create significant rework and billing delays
37
© 2020 AHIMA
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Revenue Cycle: Middle Process
• Charge capture
• Example:
• Patient is seen in the emergency department
• The patient is assessed
• Services are decided including laboratory tests and an x-ray
• Medications are provided
• What types of charges do you believe should be
captured and assigned to this account?
38
© 2020 AHIMA
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Revenue Cycle: Middle Process
• Charge capture
• Mechanisms
• Electronic
• Encounter forms
• Interfaced from source systems
• Primary responsibility of:
• Staff in department providing service
• Revenue integrity
• Bill hold period
• Separately chargeable, separately billable
39
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Revenue Cycle: Middle Process
• Charge Description Master (CDM)
• Electronic file representing a master list of charges for
inpatient or outpatient:
• Services
• Supplies
• Devices
• Medications
• Includes elements for identifying, coding, and billing
items and services provided to patients
40
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Revenue Cycle: Middle Process
• CDM core elements
• Charge code
• Charge code description
• CPT or HCPCS code
• “Hard-coding”
• Modifiers
• Revenue code
• Price
41
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Revenue Cycle: Middle Process
• CDM example:
42
Charge code Charge code description CPT/HCPCS code Modifier
Revenue
code
Price
2786337 CATHETER, HEMODIALYSIS LONG TERM C1750 278 438
3008423 DRUG TEST PRESUMPTIVE, ANY NUMBER 80305 300 41
3207721 VENOGRAM EXTREMITY BILATERAL 75822 320 1,320.00
3406973 PARATHYROID SCAN 78070 340 798
3600223 O.R. MINOR SERVICE, 1ST
30 MIN 360 816
3600224 O.R. MINOR SERVICE, EACH ADDL 15 MIN 360 276
© 2020 AHIMA
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Revenue Cycle: Middle Process
• CDM additional elements
• Date charge code created
• Date charge code deactivated
• Unique code identify department cost center
• Payer specific requirements for reporting
• CPT/HCPCS
• Revenue code
43
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Revenue Cycle: Middle Process
• CDM continually updated due to:
• Regulatory changes in codes
• Changing in reimbursement guidelines
• Modifications by chargemaster vendor
• Services or procedures provided by not current
represented in chargemaster
• Changes in represented department codes
• Mismatch in code and description
• Claim scrubber errors—discussed later
• Delayed claims due to chargemaster element issues
44
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Revenue Cycle: Middle Process
• CDM maintenance
• Multidisciplinary effort
• Expertise
• Coding
• Clinical procedures
• Health record documentation
• Billing regulations
• Contract terms
45
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Revenue Cycle: Middle Process
• Consequences of inaccurate CDM
• Free service provided
• Missed opportunity to bill if setup of charge after service
provided
• Billing delays
• Increase in cost to organization
46
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BACK-END PROCESS
47
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Revenue Cycle: Back-End Process
• Includes:
• Billing system
• Claims preparation
• Claims editing
• Claim submission
• Payment posting
• Collections and account follow-up
• Denial management
• Remittance management
• Revenue audit
• Revenue recovery
48
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Revenue Cycle: Back-End Process
• Billing system
• Combine information from variety of sources
• Administrative
• Clinical
• Begins the creation of a bill
49
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Revenue Cycle: Back-End Process
• Claims preparation
• Methods
• Manual format (paper-claim form)
• Healthcare facilities = CMS-1450 or UB-04
• Professional = CMS-1500
• Electronic format
• Healthcare facilities = 837i
• Professional = 837p
• Maintained by:
• Healthcare facilities = National Uniform Billing Committee
(NUBC)
• Professional = National Uniform Claim Committee (NUCC)
50
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Revenue Cycle: Back-End Process
• Claims editing
• Claims scrubber
• Software designed to detect errors that would result in payer
rejection or denials
• Includes standard edits, but can customize to accommodate
payer specific issues
• Medicare Code Editor (MCE)
• Integrated Outpatient Code Editor (IOCE)
• National Correct Coding Initiative (NCCI)
• Medically Unlikely Edits (MUEs)
• Custom Edits
51
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Revenue Cycle: Back-End Process
• Claim submission
• “Dropping a bill’
• Clean claims
• Timely filing
• Medicare
• Commercial payers
52
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Revenue Cycle: Back-End Process
• Payment posting
• Posting to correct individual accounts
• Payment ≠ charges
• Overpayment controls
• Goal is account balance = $0
• Accounts receivable days (A/R days)
53
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Revenue Cycle: Back-End Process
• Collections and account follow-up
• Claims adjudication
• Discounts and adjustments
• Deductibles, coinsurance, and copayments
• Patient friendly billing
• Collection process
• Third-party collection agencies
54
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Revenue Cycle: Back-End Process
• Denial management
• Payer’s refusal to provide payment
• Common reasons:
• Registration/eligibility
• Missing or invalid claim data
• Authorization/precertification
• Medical documentation requested
• Service not covered
• Medical coding
• Medical necessity
• Untimely filing
• Appropriateness of care
55
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Revenue Cycle: Back-End Process
• Denial management programs
• Prevention and recovery
• Use core analytics to inform and educate
• Focus and evaluation of denial trends
• Use teams to manage
• Tracking
• Patterns
• Root cause
• Determine significance of impact
56
© 2020 AHIMA
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Revenue Cycle: Back-End Process
• Remittance management
• Remittance advice (RA) or “835” provide explanation
about:
• Payments
• Deductibles and co-payments
• Adjustments
• Denials
• Missing or incorrect data
• Refunds
• Claims withholding due to Medicare Secondary Payer (MSP) or
penalty situations
57
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Revenue Cycle: Back-End Process
• Remittance management
• Revenue audit
• Was provider paid what was expected?
• Revenue recovery
• If the answer was ‘no’ to revenue audit expectation, determine
efforts for investigation of payment variations
• Specific payers
• Patient type (inpatient or outpatient)
• High dollar cases
58
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Revenue Cycle: Support Services
• Includes:
• Payer relations and health plan contracts
• Patient relations and customer service
59
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Revenue Cycle: Support Services
• Payer relations and health plan contracts
• Contract terms are negotiated with many third-party
insurers
• Two specific components:
• Basis of Payment
• Payment terms or schedules
• Contract management has own life cycle
60
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Revenue Cycle: Support Services
• Patient relations and customer service
• Create positive patient experience
• Patient satisfaction and loyalty
• Managing patient perceptions
• Build customer service
• Patient engagement
• Transparency
• Consumer-centric
61
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Revenue Cycle: Performance Measures for
Improvement
• Measure, monitor, and set goals
• Key performance indicators
• Benchmarking
• Measure against established benchmarks
• Influences:
• Geographic location
• Bed size
• Payer mix
• Net patient revenue
• Mix of patient type visits
62
© 2020 AHIMA
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Revenue Cycle: Performance Measures for
Improvement
• MAP Keys
• “comprehensive revenue cycle strategy to measure
performance, apply evidence-based improvement
strategies, and perform to the highest standards to
improve financial results and patient satisfaction”
• 29 KPIs in 5 major groups:
• Patient access
• Pre-billing
• Claims
• Account resolution
• Financial management
63
© 2020 AHIMA
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Revenue Cycle: Performance Measures for
Improvement
• Examples of MAP® Keys
64
Group Measure Purpose Value Equation*
Patient Access Point-of-service cash
collections
Trending indicator of point-
of-service collection efforts
Accelerates cash collections and
may reduce collection costs
N: Patient POS payments
D: Total self-pay cash collected
Pre-Billing Days in total discharged,
not submitted to payer
(DNSP)
Trending indicator of total
claims generation and
submission process
Indicates revenue cycle
performance and can identify
performance issues impacting
cash flow
N: gross dollars in DNFB + gross
dollars in FBNS
D: Average daily gross patient
service revenue
Claims Clean Claim Rate Trending indicator of claims
data as it impacts revenue
cycle performance
Indicates quality of data collected
and reported
N: Number of claims that pass
edits requiring no manual
intervention
D: Number of claims accepted into
claims processing tool for billing
Financial
Management
Net days in accounts
receivable (A/R)
Trending indicator of overall
A/R performance
Indicates revenue cycle (RC)
efficiency
N: Net A/R
D: Average daily net patient
service revenue
*N = Numerator, D = Denominator.
Source: HFMA 2018
© 2020 AHIMA
ahima.org
Healthcare Revenue Cycle for an Individual
Account
65

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HM480 Ab103318 ch08

  • 1. © 2020 AHIMA ahima.orgahima.org Health Information Management: Concepts, Principles, and Practice Sixth Edition Chapter 8 Revenue Cycle Operations
  • 2. © 2020 AHIMA ahima.org Introduction • “A healthcare organization’s financial circulatory system” (HIMSS 2018) • Begins when patient initiates to receive services in a healthcare system • Ends when payment for services are rendered and account is closed • Success depends on: • People • Tools/technology • Processes 2
  • 3. © 2020 AHIMA ahima.org Revenue Management Life Cycle 3
  • 4. © 2020 AHIMA ahima.org Revenue Cycle vs. Life of an Individual Account • The term revenue cycle suggests the patient account flow is cyclical • The life of an individual patient account flows through specific stages from beginning to end 4
  • 5. © 2020 AHIMA ahima.org Healthcare Revenue Cycle for an Individual Account 5
  • 7. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Includes: • Patient access components • Scheduling • Preregistration • Insurance verification • Preauthorization and precertification • Medical necessity coverage issues • Registration • Financial counseling • Point of service collection • Preencounter services 7
  • 8. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Patient access components • Scheduling • Preregistration • Registration 8
  • 9. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Scheduling patient services • Obtain source of payment • Collect patient demographics • Validate patient information upon arrival, if preregistered • Contribute to an excellent patient experience 9
  • 10. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process 10 Examples of Common Registration Errors Incorrect insurance plan listed Policy or group number missing or invalid Patient with insurance listed as private pay Patient not eligible on date of service Medicare listed when plan is Medicare health maintenance organization (HMO) Medicare listed as primary when should be secondary Minors listed as guarantors More than one medical record number per patient Accident claims without occurrence codes Patient relationship to insurance subscriber code errors Failure to list medical necessity Missing guarantor or employer information Physician orders incomplete or missing Missing prior authorization or required for service provided Source: Shorrosh 2011
  • 11. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process 11 Examples of Common Registration Errors Internal coding mismatches (financial class to patient type to stay type to service code to admit cod) Transposed digits: Social Security number, date of birth, policy number, group number Invalid punctuation in specified text fields Misspelled name Insurance eligibility verification failure Address verification failure (returned mail cost) Observation patient with inpatient stay type Point-of-service collection failure Incomplete or inaccurate Medicare secondary payer questionnaire Source: Shorrosh 2011
  • 12. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Insurance verification • Validate patient is member of insurance plan • Determine if plan is in-network or out-of-network • Determine if scheduled services: • Expenses are covered • Require referral or prior authorization • Require out-of-pocket expense 12
  • 13. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Preauthorization • Requires healthcare provider obtain permission from the health insurer prior to predefined services being provided to the patient • Precertification • When the insurance carrier must review the proposed service or procedure and approve it as medically necessary before payment will be granted to the provider 13
  • 14. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Preauthorization and Precertification • Staff need to understand medical procedures and tests, initial diagnoses, and scheduled treatments to obtain the necessary preauthorization or precertification by the insurer • Wide variation in authorization and certification requirements among payers 14
  • 15. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Medical necessity coverage issues • Insurers cover health-related services that they define or determine to be medically necessary • American College of Medical Quality (ACMQ)—focus is providing leadership and education in healthcare quality management 15
  • 16. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Medical necessity • Medicare coverage policies—national coverage determinations (NCDs) • Local Medicare administrative contractor policies—local coverage determinations (LCDs) 16
  • 17. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Medical necessity • Advanced beneficiary notice of noncoverage (ABN) • Hospital-issued notice of noncoverage (HINN) 17
  • 18. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Registration (a.k.a. “admissions”) • Verify patient demographics collected during scheduling • Obtain copies of patient insurance card • Verify identify using driver’s license or other government-issued ID • Obtain patient consent • Collect copayment or deductible • Initiate financial counseling, if applicable 18
  • 19. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Financial counseling • Ensure patient understands the financial aspects of care and process for resolving any financial responsibility • Financial counselors responsible for: • Identifying and verifying method of payment • Understanding patient’s financial assets • Discussing payment alternatives with patient 19
  • 20. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Financial counseling • Strategies for financial counselors include: • Providing discounts on hospital bills • Providing incentives for prompt-payment discounts • Consistently following procedures 20
  • 21. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Point of service collection • Collection of portion of the bill which is the patient’s responsibility to pay prior to provision of service being rendered • Works well with scheduled and non-emergent patient visits • Communication with patient to set expectation of cost of services, insurance coverage, and expected payment 21
  • 22. © 2020 AHIMA ahima.org Revenue Cycle: Front-End Process • Preencounter services • Centers handle • Preregistration • Insurance eligibility • Benefit verification • Payer preauthorization or precertification • POS collections 22
  • 24. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Includes: • Clinical services • Clinical documentation • Case and utilization management • Health information management and clinical coding • Charge capture • Charge description master 24
  • 25. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Clinical Services • Services and procedures provided to diagnose or treat the patient • Information about encounter documented • Old adage • “If it is not documented, it did not happen” and therefore, not reimbursable 25
  • 26. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Clinical Documentation • Complete, accurate, and timely documentation of patient history, assessment, surgical and procedure notes, and clinical plan • Documentation to support provided service • Reflects actual condition of patient 26
  • 27. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Clinical Documentation • Operates as a communication tool • Critical for patient safety and continuity of care • Supports decisions made in patient care • Supports reimbursement from payers • Supports services provided as legal testimony • Functions as the provider’s business and legal record 27
  • 28. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Case and utilization management • Delivering the appropriate care at the appropriate time in the appropriate patient setting reflecting the appropriate cost is key to the concept of successful case and utilization management 28
  • 29. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Case management • Collaborative process of assessment, planning, facilitation, care coordination, evaluation, and advocacy for options and services to meet comprehensive health needs through communication and available resources to promote patient safety, quality of care, and cost- effective outcomes • Utilization management • Planned, systematic review of patients receiving healthcare services against criteria for appropriateness of services being provided as well as admission, continued stay, and discharge planning 29
  • 30. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Case management role • Improve outcomes • Ensuring appropriate and timely care is provided • Connecting with patients after they leave the facility • Eliminate avoidable days • Reducing risks of readmissions • Enhancing claims management 30
  • 31. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Utilization management role • Review health record to obtain information to make UR decisions • Apply criteria objectively for admissions, continued stay, level of care, and discharge readiness • Screen and coordinate elective and emergency admissions and transfers, outpatient observations, and conversions of status as appropriate and compliant 31
  • 32. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Utilization management • HINN • Medicare hospital-issued notices of noncoverage • If services • Not medically necessary, • Not delivered in the most appropriate setting, or • Custodial in nature • Adverse determination • Commercial payers 32
  • 33. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Health information management and clinical coding 33 Provider Inpatient Outpatient Diagnosis Procedure Diagnosis Procedure Physician/ Professional ICD-10-CM HCPCS (Level I = CPT & Level II) ICD-10-CM HCPCS (Level I = CPT & Level II) Facility/ Hospital ICD-10-CM ICD-10-PCS ICD-10-CM HCPCS (Level I = CPT & Level II)
  • 34. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Health information management and clinical coding • “Soft-coding” • Human interaction with assessing clinical documentation • Selecting code assignment • “Hard-coding” • Discussed later with chargemaster functions 34
  • 35. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Health information management and clinical coding • Discharged, not final billed (DNFB) • ICD diagnosis and procedure code assignment • CPT or HCPCS code assignment • Case mix index (CMI) • Service mix index (SMI) • Physician queries 35
  • 36. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Charge capture • Method of recording services and supplies or items delivered to patient and billed on a claim form • Used for: • Reimbursement • Tracking and utilization • Monitoring inventory 36
  • 37. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Charge capture • Importance of quality charge capture: • Payment related to charges • Charges submitted assist future rate setting • Charges reflect resource utilization • Charges assist with measuring productivity and labor costs • Errors create significant rework and billing delays 37
  • 38. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Charge capture • Example: • Patient is seen in the emergency department • The patient is assessed • Services are decided including laboratory tests and an x-ray • Medications are provided • What types of charges do you believe should be captured and assigned to this account? 38
  • 39. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Charge capture • Mechanisms • Electronic • Encounter forms • Interfaced from source systems • Primary responsibility of: • Staff in department providing service • Revenue integrity • Bill hold period • Separately chargeable, separately billable 39
  • 40. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Charge Description Master (CDM) • Electronic file representing a master list of charges for inpatient or outpatient: • Services • Supplies • Devices • Medications • Includes elements for identifying, coding, and billing items and services provided to patients 40
  • 41. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • CDM core elements • Charge code • Charge code description • CPT or HCPCS code • “Hard-coding” • Modifiers • Revenue code • Price 41
  • 42. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • CDM example: 42 Charge code Charge code description CPT/HCPCS code Modifier Revenue code Price 2786337 CATHETER, HEMODIALYSIS LONG TERM C1750 278 438 3008423 DRUG TEST PRESUMPTIVE, ANY NUMBER 80305 300 41 3207721 VENOGRAM EXTREMITY BILATERAL 75822 320 1,320.00 3406973 PARATHYROID SCAN 78070 340 798 3600223 O.R. MINOR SERVICE, 1ST 30 MIN 360 816 3600224 O.R. MINOR SERVICE, EACH ADDL 15 MIN 360 276
  • 43. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • CDM additional elements • Date charge code created • Date charge code deactivated • Unique code identify department cost center • Payer specific requirements for reporting • CPT/HCPCS • Revenue code 43
  • 44. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • CDM continually updated due to: • Regulatory changes in codes • Changing in reimbursement guidelines • Modifications by chargemaster vendor • Services or procedures provided by not current represented in chargemaster • Changes in represented department codes • Mismatch in code and description • Claim scrubber errors—discussed later • Delayed claims due to chargemaster element issues 44
  • 45. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • CDM maintenance • Multidisciplinary effort • Expertise • Coding • Clinical procedures • Health record documentation • Billing regulations • Contract terms 45
  • 46. © 2020 AHIMA ahima.org Revenue Cycle: Middle Process • Consequences of inaccurate CDM • Free service provided • Missed opportunity to bill if setup of charge after service provided • Billing delays • Increase in cost to organization 46
  • 48. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Includes: • Billing system • Claims preparation • Claims editing • Claim submission • Payment posting • Collections and account follow-up • Denial management • Remittance management • Revenue audit • Revenue recovery 48
  • 49. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Billing system • Combine information from variety of sources • Administrative • Clinical • Begins the creation of a bill 49
  • 50. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Claims preparation • Methods • Manual format (paper-claim form) • Healthcare facilities = CMS-1450 or UB-04 • Professional = CMS-1500 • Electronic format • Healthcare facilities = 837i • Professional = 837p • Maintained by: • Healthcare facilities = National Uniform Billing Committee (NUBC) • Professional = National Uniform Claim Committee (NUCC) 50
  • 51. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Claims editing • Claims scrubber • Software designed to detect errors that would result in payer rejection or denials • Includes standard edits, but can customize to accommodate payer specific issues • Medicare Code Editor (MCE) • Integrated Outpatient Code Editor (IOCE) • National Correct Coding Initiative (NCCI) • Medically Unlikely Edits (MUEs) • Custom Edits 51
  • 52. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Claim submission • “Dropping a bill’ • Clean claims • Timely filing • Medicare • Commercial payers 52
  • 53. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Payment posting • Posting to correct individual accounts • Payment ≠ charges • Overpayment controls • Goal is account balance = $0 • Accounts receivable days (A/R days) 53
  • 54. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Collections and account follow-up • Claims adjudication • Discounts and adjustments • Deductibles, coinsurance, and copayments • Patient friendly billing • Collection process • Third-party collection agencies 54
  • 55. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Denial management • Payer’s refusal to provide payment • Common reasons: • Registration/eligibility • Missing or invalid claim data • Authorization/precertification • Medical documentation requested • Service not covered • Medical coding • Medical necessity • Untimely filing • Appropriateness of care 55
  • 56. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Denial management programs • Prevention and recovery • Use core analytics to inform and educate • Focus and evaluation of denial trends • Use teams to manage • Tracking • Patterns • Root cause • Determine significance of impact 56
  • 57. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Remittance management • Remittance advice (RA) or “835” provide explanation about: • Payments • Deductibles and co-payments • Adjustments • Denials • Missing or incorrect data • Refunds • Claims withholding due to Medicare Secondary Payer (MSP) or penalty situations 57
  • 58. © 2020 AHIMA ahima.org Revenue Cycle: Back-End Process • Remittance management • Revenue audit • Was provider paid what was expected? • Revenue recovery • If the answer was ‘no’ to revenue audit expectation, determine efforts for investigation of payment variations • Specific payers • Patient type (inpatient or outpatient) • High dollar cases 58
  • 59. © 2020 AHIMA ahima.org Revenue Cycle: Support Services • Includes: • Payer relations and health plan contracts • Patient relations and customer service 59
  • 60. © 2020 AHIMA ahima.org Revenue Cycle: Support Services • Payer relations and health plan contracts • Contract terms are negotiated with many third-party insurers • Two specific components: • Basis of Payment • Payment terms or schedules • Contract management has own life cycle 60
  • 61. © 2020 AHIMA ahima.org Revenue Cycle: Support Services • Patient relations and customer service • Create positive patient experience • Patient satisfaction and loyalty • Managing patient perceptions • Build customer service • Patient engagement • Transparency • Consumer-centric 61
  • 62. © 2020 AHIMA ahima.org Revenue Cycle: Performance Measures for Improvement • Measure, monitor, and set goals • Key performance indicators • Benchmarking • Measure against established benchmarks • Influences: • Geographic location • Bed size • Payer mix • Net patient revenue • Mix of patient type visits 62
  • 63. © 2020 AHIMA ahima.org Revenue Cycle: Performance Measures for Improvement • MAP Keys • “comprehensive revenue cycle strategy to measure performance, apply evidence-based improvement strategies, and perform to the highest standards to improve financial results and patient satisfaction” • 29 KPIs in 5 major groups: • Patient access • Pre-billing • Claims • Account resolution • Financial management 63
  • 64. © 2020 AHIMA ahima.org Revenue Cycle: Performance Measures for Improvement • Examples of MAP® Keys 64 Group Measure Purpose Value Equation* Patient Access Point-of-service cash collections Trending indicator of point- of-service collection efforts Accelerates cash collections and may reduce collection costs N: Patient POS payments D: Total self-pay cash collected Pre-Billing Days in total discharged, not submitted to payer (DNSP) Trending indicator of total claims generation and submission process Indicates revenue cycle performance and can identify performance issues impacting cash flow N: gross dollars in DNFB + gross dollars in FBNS D: Average daily gross patient service revenue Claims Clean Claim Rate Trending indicator of claims data as it impacts revenue cycle performance Indicates quality of data collected and reported N: Number of claims that pass edits requiring no manual intervention D: Number of claims accepted into claims processing tool for billing Financial Management Net days in accounts receivable (A/R) Trending indicator of overall A/R performance Indicates revenue cycle (RC) efficiency N: Net A/R D: Average daily net patient service revenue *N = Numerator, D = Denominator. Source: HFMA 2018
  • 65. © 2020 AHIMA ahima.org Healthcare Revenue Cycle for an Individual Account 65